How The Fed-Driven Multiple-Expansion "Robs From The Future"

2012 was unusual for many reasons. As Morgan Stanley's Adam Parker notes, the kind of stocks that worked in what was a big up tape were very atypical - higher-quality, larger-cap. While the Strategist graciously accepts that his year-end 'bearish' call for 2012's S&P 500 performance was a miss, it is his reasoning that is key. Having a framework is critical and while CNBC anchors merely look on and judge a book by its cover, Parker's critical insight that last year's performance was all multiple expansion and "The reason we got multiple expansion last year was the Fed is creating trillions of dollars on a computer" is perhaps the most critical take-away for anyone claiming victory. His succinct summary for 2013 (e.g. earnings consensus needs to come way down, and Fed unconventional policy-driven multiple-expansion has 'robbed from the future') in the following clip is also worthwhile to clarify exactly what is going on under the covers of our equity markets.

Here is the reality of which Parker speaks - the magical lift in multiples that Fed action inspired - even in the face of dramatically falling earnings...

Parker defends his bearish view starting at around 2:30 (and is key to grasp reality) but the entire brief clip is insightful.

There's no way to rob the past - the closest is to dig up graves & goods in them but even so, unless goods there (like gold, gems) were left for specific later generations, it's been out of the economy for x years & no one knew or cared.

They dont give a fuck folks, not a jot. Not a sliver of a rats cock thought about you lot comes into their minds.

After all, it just us beaten down, low-life, EBT claiming, shithawks who is gonna pay it all back. With interest.

Anyone else feel this game is getting old? These fuckers is gonna have Hades himself knocking for the dues these folks create from thin air. Mark my words, a lending banker nor a borrowing banker be, this will end terrible for all us fuckers.

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Hobbs(?) was being rather aggressive in reminding Parker how wrong he was. I guess the morons at CNBC never thought that maybe, just maybe, the earnings aren't real, and this will take more time to play through. As Kyle Bass said, if you take all the bad debts and put them on the public balance sheet, sure, your earnings will look great. When the earnings look great multiples expand...

When inflation rears its ugly head, we'll see how justified those multiples are, and how smart printing money/asset purchases are...

Some sage once said once the market gets above a PE of 15 then it's "expensive". I bet it'll be above 15 once earnings are reported. Would I buy stock here. Nope! Neither would I short. Buying bonds would be dumb to. Damn, other than gold, cash is a position.

Time-travel robbery of whole nations and generations is a specialty of some of the outfits in Wall Street. And when they fail in the grand scheme and need the cash in the present, they come back to Mamma. The US taxpayer. Born and unborn.

Reserve Currency Status means... "never having to say you’re sorry" (for fiscal rape).But I hear from some (Missouri?) ex-Congressman, that God lets the fiscal body to protect itself from rape, by shutting it all down.If not, oh well, just carry the debt load to term. Consider it a legacy gift from guys doing “God’s work”.Dark humor, I know.But these are dark times.

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